The threat to Pakistan’s 5G development is posed by the fact that three out of four Mobile Network Operators (MNO) spend more than 10% of their yearly earnings on the spectrum.
This information was made public in the Ministry of Information Technology and Telecommunication’s (MOITT) official documents. Research on the Pakistani spectrum was conducted by the international company Coleago Consulting, and the ministry is now reviewing it.
Due to the high cost of spectrum, operators may be less able to sustain low-cost services and make investments, which would hinder the development of MBB networks and lead to more expensive, lower-quality MBB services. It will eventually impede the growth of digital social and economic systems.
The documents urged that the government take steps to make the spectrum more accessible to operators.
Many nations adopt strategies like annual payments and delayed payments, among others, to lessen the financial burden placed on operators, particularly during the initial years of network roll-out.
The network coverage, service selection, uptake, and competition are often stronger in nations with cheap spectrum auction costs and lengthy spectrum license terms.
According to a GSMA econometric analysis, high spectrum charges have a negative impact on consumer outcomes by limiting the financial capacity for network expansion.
The documents also indicated that high spectrum costs in developing nations hindered the implementation of 3G and 4G networks and resulted in long-term declines in network quality overall.
The cost of spectrum is decreasing on a global scale. The Spectrum Price Index (SPI), or total spectrum cost divided by monthly mobile income, was calculated as part of a Coleago Consulting study.
SPI for 3G, 4G, and 5G is 6, 4, and 2, respectively. This translates to annualized spectrum costs for 3G, 4G, and 5G of 3%, 2%, and 1% of revenue, respectively.
In nations like China, the United Arab Emirates, Saudi Arabia, and Kuwait, the percentage is less than 1%.
The Coleago study determined how the annualized cost of the spectrum would affect MBB investment and came to the following conclusions:
- The cost of a spectrum of up to 5 percent is unlikely to slow down investment in mobile broadband and 5G. There is also evidence that a lower percentage is likely to deliver better outcomes for 5G deployment
- In many well-developed 4G markets, the annualized cost of spectrum is 5-9 percent of mobile revenue. This indicates that below 10 percent of the annualized may not have a material negative impact on network deployment.
Operators may experience financial difficulties when spectrum costs reach 10% of mobile income, which means that investments in mobile broadband and 5G would likely go more slowly than they otherwise would.
The development of 5G is threatened if spectrum costs exceed 10% of revenue.
To read our blog on “Ericsson raises sustainability bar a new with triple-band, tri-sector 5G radio,” click here.